Financial Instruments: A Stocktaking Exercise in Preparation for the 2014-2020 Programming Period

As a key instrument of Cohesion Policy, European Structural Funds support regional competitiveness and employment, and aim to stimulate growth and employment within the least developed regions of the European Union (EU). Under the General Regulation1 , the Financial Engineering Instruments (FEIs) can be established to invest in enterprises, primarily SMEs (Article 44a), Urban Development (Article 44b), and Energy Efficiency and Renewable Energy in Buildings (Article 44c). As the European Commission (EC/ the ‘Commission’) and Member States start to prepare for the 2014-2020 programming period, it was considered important to learn from the experience to date on FEIs and what Member State intentions are in relation to establishing Financial Instruments2 (FIs). Within the framework of a grant for supporting studies awarded by the Commission, the European Investment Bank (EIB) has therefore appointed Mazars, Ecorys and the European Policy Research Centre (EPRC) to carry out this Study; “Financial Instruments: a stocktaking exercise in preparation for the 2014-2020 programming period” (referred to as the ‘Stocktaking Study’). This Study has been carried out in close co-operation with, and input from, the Commission, the European Investment Bank (EIB), and the European Investment Fund (EIF) as well as stakeholders at Member State and regional level involved in implementation of FEIs. As a stocktaking exercise, the Study does not seek to provide an evaluation of the effectiveness of FEI interventions, but instead aims to understand more about current experience and future intentions in relation to establishing them. Through learning from experience to date, the Study aims to create a pool of knowledge that can be used to assist the Commission, Member States, Managing Authorities (MAs), regions, and Financial Intermediaries in establishing and managing FEIs and FIs as efficiently and effectively as possible in the future. The Study reviewed current available literature regarding FEI establishment and implementation. This was complemented by inputs from an internet survey, national interviews in the 27 Member States and Croatia, and a detailed analysis of a representative sample of 50 revolving fund case studies: Overall, 301 separate individuals provided data, making this the most comprehensive Study to date on the experience of FEI establishment and implementation. Prior research tended to either have focused on specific countries, particular types of FEIs or financial products, or was undertaken at a much earlier stage in the programming period and/or the FEI implementation cycle. In summary, the results from the Stocktaking Study indicate that the following would be useful to help ensure quick and efficient establishment and implementation of FIs in the next period: 1. Early clarification and guidance in relation to the regulations for the next programming period; 2. Providing as much flexibility as possible in FI design, together with clear risk and return ratios to help to increase private sector investment in Final Recipients or FIs; 3. Provision of Technical Assistance across a range of technical, legal, and financial topics; 4. A capacity building programme provided at an EU level for all actors involved, especially where the use of FIs is newer.